PAP and NTUC: An Open Courtship

The PAP and NTUC do not hide their collaboration or "symbiotic relationship". The PAP's master-maid ties with NTUC were formalised in the late 1970s during the Devan Nair era. This arrangement came about because then PM Lee Kuan Yew stressed the importance of the trade union being managed properly by the PAP and pondered on,

"how to ensure that the PAP-NTUC symbiotic relatonship will endure between younger leaders in the PAP and the NTUC. Put simply, who will educate a younger generation of union leaders to recognise their strengths and their limits; namely that if the union leadership challenges the political leadership, political leaders must triumph..."

After the 1979 NTUC seminar "Progress into the 1980s", NTUC and PAP institutionalised the collaboration when in September 1980, NTUC Secretary-General Lim Chee Onn became a Minister without Portfolio.

The Rising Food Prices and the Growing Grumblings

In December last year, NTUC Fairprice launched its 5% discount promise for its house brand essential items which includes rice, pasta, canned food, diapers, toilet rolls etc. The promotion was initially to last until February, then April, and now it has been extended till July. NTUC timed the promotion when inflation in Singapore in 2008 was expected to hit 5-6%. Therefore, the discount for the 500 house brand items only was meant to offset inflation for the cost but not brand conscious consumer. NTUC house branding is most aggressive now particularly when consumers are looking for cheaper substitutes in the supermarkets. From May, NTUC would also introduce the U-Stretch coupons which expires in December for eligible NTUC members. $4 million worth of $50 coupons would be distributed to "needy" NTUC members.

Furthermore, the recent efforts by Fairprice to help the "needy" adjust to inflation are echoes of its roots. The 1973 origins of Fairprice itself was in the context of the global oil shortage crisis and inflation, and helping union members to cope with the rising cost of living.

NTUC Fairprice's U-Stretch and selective 5% discount promotions are partly altruistic but also partly aimed at deepening market penetration and branding in this belt-tightening period. A critic can argue that Fairprice's promotion is "exploiting" consumers, preying on their need for a good deal rather than a genuine display of goodwill. There is some truth in this argument, but realistically after all, Fairprice supermarkets are supposed to be part of a co-op, not a charity.

Could NTUC Fairprice do more like offering the 5% discount to non-house brand items? It can but should it? Enter a variation of the shareholder and stakeholder debate. Fairprice's primary concern is the interests of its members, the raison detre of the co-op. To be fair, Fairprice because of its union roots is already more conscious about its image that it focuses more on stakeholder than shareholder interests compared with the other supermarkets. This stakeholder focus image is anyway clever marketing as all things equal, ethical consumers would want to patronise a retailer with a perceived track record of corporate social responsibility and of giving back to the community.

Nevertheless, precisely because of this image and open symbiotic relationship with the PAP, stakeholders including government critics would expect Fairpice to be concerned about corporate social responsibility than Cold Storage or Sheng Siong, and want more, citing Fairprice's profit of $100 million in 2007 in comparison with its U-Stretch and house brand promotion goodwill which cost Fairprice about $4 million and $4.5 million respectively.

NTUC Fairprice: Profit, Philanthropy and Politics

Recently, the government through ComCare set up a $1 million fund for the needy and reaffirming the PAP-NTUC symbiotic relationship to a extent, it has also decided to support any plan NTUC Fairprice has in addressing the inflation concerns of the lower income.

The government's policy towards handouts, pre-election or otherwise, has always been one-off e.g. GST Rebates or via a proxy. This is probably so that it is not packaged as a precedent for state welfare or as a sustained so-called "crutch". NTUC Fairprice's $4 million U-Stretch programme, 4 times the official aid the government set aside in this particular ComCare effort, fits into handout distribution mentality and method appropriately, and perhaps there is an unseen government hand in U-Stretch. This makes political sense as it boosts the image of Fairprice as the people's supermarket, and that NTUC takes care of its members first and with the selective 5% discount, Singapore society as a whole as well. Whether the Fairprice consumer is reminded that the PAP is rightly or wrongly the ultimate benefactor behind Fairprice's "generosity" is probably more subconscious than conscious.

Fairprice is about profit first. But as the co-op is politically associated with the PAP indirectly, its operations are sometimes confused as about being philanthropic first.

Fairprice, because of its geographical distribution, caters to a specific kind of consumer. Fairprice, because of its perceived pricing, caters to a specific kind of customer. Fairprice, because of its "local" image, caters to a specific kind of constituent. In short, Fairprice caters to the romanticised "heartlander". In a way, Fairprice's food discounts and indirectly the PAP, are imagined as helping the heartlander in times of need. Whether the heartlanders' needs are adequately addressed, perhaps they are for now if they shop for NTUC home brand items or are eligible NTUC members. But Fairprice is not doing more as there are shareholder limits to corporate social responsibility. All things equal, corporate social responsibility is always secondary to financial decisions and performance e.g. the more money made, the more can be spent to make an impact on society, and vice versa. Moreover, Fairprice is already probably a market leader and this token gesture of food discounts is sufficient for it to keep ahead of the pack now. Unless an opposition party can set up a SMC-based co-op supermarket "FairMarket" and offer its own cheaper house brands.